China warns EU against telecoms probe

The EU is China's biggest trading partner, with total two-way trade reaching $546bn last year [EPA]

China has threatened to retaliate if the European Union formally opens an investigation into alleged anti-competitive behaviour by Chinese mobile telecom equipment companies.

The European Commission said earlier this week it would open an anti-dumping and anti-subsidy investigation into mobile telecommunications network equipment and components from China if bilateral negotiations fail.

Beijing's commerce ministry spokesman Shen Danyang said on Thursday that European mobile telecom equipment firms enjoy a "much bigger" market share in China than Chinese companies have in the EU, and any moves by Brussels will harm them both.

"We hope the EU will not take actions that do no good to either side," he told reporters.

Beijing will take "assertive" measures to "defend our lawful interests and rights" according to World Trade Organisation rules and Chinese laws, he said, if the EU follows through with the investigation.

China "does not want to go into a trade war with the European Union", he said, but warned: "Any consequences caused must be borne by the party who provoked the friction."

China is the world's second-largest economy and the EU is its biggest trading partner, with total two-way trade reaching $546bn last year according to Chinese Customs figures.

'Chinese subsidies'

An investigation would be the first to be launched without a complaint by European companies, but rather by the Commission itself.

Manufacturers such as Ericsson, Nokia Siemens Networks and Alcatel-Lucent have suffered as a result of cheap Asian imports but will not make formal complaints for fear of Chinese reprisals, which has made it hard for the Commission to gather evidence.

Although not mentioned in the statement, EU officials told Reuters the primary targets of the investigation would be world No 2 telecoms equipment maker Huawei and smaller Chinese company ZTE.

Officials said they now had proof of Chinese subsidies, but both Huawei and ZTE deny benefiting from illegal state support. Huawei also denied it was selling telecoms equipment below cost to secure market share.

Shen said China had made a proposal over the telecoms matter to the European Commission during a recent visit by an EU delegation to China, but had still not received any response.

"This makes one cast doubt on the sincerity of the EU to resolve conflicts through consultations," Shen said.

EU officials said on Wednesday they have had an open-door policy to the Chinese authorities for more than a year at China's own request, but that the response had been disappointing so far.

"As we made clear yesterday, the European Commission counts on our Chinese partners to take up the offer of negotiations in a serious manner to find an amicable solution to resolve this situation," EU trade spokesman John Clancy told Reuters on Thursday.

The EU and China are embroiled in a series of tit-for-tat disputes on items ranging from agricultural products to steel tubes.

Earlier this week, officials said the European Commission had agreed to impose average import duties of 47 percent on solar panels from China, a move they say is to guard against the dumping of cheap goods in Europe.